Ukraine has changed the rules for returning bank deposits: what the new law provides

The Verkhovna Rada adopted draft law No. 13007-d, which significantly changes the rules for the operation of banks, the Deposit Guarantee Fund for Individuals, and the National Bank. Among the key innovations are the automatic return of guaranteed funds to depositors, new requirements for bank capital, and enhanced cyber protection.

271 MPs voted for the document in the second reading and overall. The draft law is one of the structural beacons within the framework of Ukraine’s agreements with the International Monetary Fund.

Depositors will be refunded their money automatically

One of the main changes concerns clients of insolvent banks.

Individuals, including sole proprietors, will no longer need to independently submit a written application to the Deposit Guarantee Fund to receive the guaranteed amount. The refund of funds should occur automatically.

The procedure for handling money that depositors did not withdraw during the liquidation of a bank is also changing. Such funds will not be lost after a certain period of time. They will be transferred to the DGF, and the owner will be able to apply for them later.

Capital requirements for banks will be increased

The minimum authorized capital of a bank will be changed from a fixed UAH 200 million to EUR 5 million.

Banks already operating on the market will receive a six-month transition period to bring their capital into line with the new requirements.

In addition, cybersecurity requirements are being tightened. The National Bank will be able to establish rules for protecting information systems, payment infrastructure, and customer data of financial institutions.

The NBU will receive additional powers

In the event of a bank’s liquidation, the National Bank will have the status of a secured creditor for claims related to refinancing loans.

This means that the funds from the sale of collateral can primarily be used to repay the relevant debts to the NBU.

The National Bank will also receive additional powers in the field of cyber security and will be able to independently determine the procedure for withdrawing old banknotes and coins from circulation.

Ukraine to Create “Bridge” Banks

Another important innovation is that the Deposit Guarantee Fund will be able to create so-called bridge banks.

These are temporary financial institutions that will allow the viable assets, client transactions, and banking services of a troubled bank to be preserved until it is sold to an investor.

Such a mechanism should reduce the risk of situations where, after a bank is removed from the market, its clients actually immediately lose access to some financial services.

The rules for appealing auctions will also change

Former bank owners and other interested parties will be given a period of up to one month to appeal the results of auctions for the sale of bank property.

Individual decisions of the Deposit Guarantee Fund will also be allowed not to be made public if this is necessary to protect banking secrecy.

The draft law also provides for changes in the investment sector. In particular, the minimum investment amount in collective investment institutions is being abolished for individuals, and investment funds will be allowed to invest in domestic government bonds.